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The U.S. Dollar and Euro could be forming large Head & Shoulders patterns, that could be suggesting large moves are in store for both of them. The U.S. Dollar could be forming a bearish head & shoulders pattern, that would suggest a good deal of weakness would take place if the neckline at (1), would be taken out to the downside.
So far the Neckline on the US$ has been VERY STRONG support over the last year (rallies have taken place off the neckline). The key to this pattern….Will the neckline continue to provide downside protection for the US$!
While the media is focusing on the “Fiscal Cliff” of late, investors might want to focus on the message these key currencies could be sending and what key risk assets could do if the neckline is taken out.